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Ctc Demolition Company, Inc v. Gmh Aetc Management/Development LLC

January 27, 2012

CTC DEMOLITION COMPANY, INC., PLAINTIFF-RESPONDENT,
v.
GMH AETC MANAGEMENT/DEVELOPMENT LLC, BALFOUR BEATTY COMMUNITIES, LLC AND BALFOUR BEATTY MILITARY HOUSING, LLC, DEFENDANTS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-000243-11.

The opinion of the court was delivered by: Fisher, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued November 29, 2011

Before Judges Fisher, Baxter and Nugent.

The opinion of the court was delivered by FISHER, J.A.D.

In this appeal, we consider how the first-filed rule of comity -- by which "the court which first acquires jurisdiction has precedence" over another court later acquiring jurisdiction absent "special equities," Yancoskie v. Del. River Port Auth., 78 N.J. 321, 324 (1978) -- applies when a party demands mediation or arbitration, as contractually obligated, and the adverse party brings a declaratory judgment suit in another state regarding the applicability of mediation or arbitration. We conclude that the demand for mediation in this case should be viewed as the first-filed action and, alternatively, that special equities preclude deferral to a court that later acquired jurisdiction over the dispute.

The circumstances are relatively simple. In March 2007, plaintiff CTC Demolition Company, Inc. entered into three contracts with defendant GMH AETC Management/Development, LLC,*fn1

for the abatement and disposal of asbestos on United States Air Force bases in Oklahoma, Texas and Arizona. These contracts contained provisions that required alternate dispute resolution in two stages -- mediation followed by arbitration, if necessary.

The contracts' mediation clauses declare that "[a]ny claim arising out of or related to" the contract "shall be subject to mediation as a condition precedent to arbitration or the institution of legal or equitable proceedings by either party"; another section describes the manner in which mediation may be demanded, identifies the American Arbitration Association (AAA) as the chosen forum, insists that mediation shall "proceed in advance of arbitration or [legal action]," and stays any other proceeding pending mediation. The arbitration clauses command that "[a]ny claim arising out of or relating to" the contract "shall be subject to arbitration" following the "endeavor to resolve disputes by mediation"; other provisions identify AAA as the forum for arbitration and that "[d]emand for arbitration shall be filed in writing" with the other party and AAA.

On June 8, 2010, CTC served Balfour with a demand for mediation in New Jersey with AAA. On June 22, 2010, Balfour commenced suit in Pennsylvania seeking a judgment declaring that CTC lacked standing to enforce or sue on the contracts.*fn2 On January 18, 2011, CTC commenced this action seeking a declaratory judgment regarding the propriety of its demand for mediation and thereafter, if necessary, arbitration.

The trial judge in this action entered an order on January 31, 2011, which required Balfour to show cause why it should not participate in mediation or arbitration in the manner described in the three March 2007 contracts. Balfour argued that CTC lacked standing to enforce the March 2007 contracts, claiming CTC had previously sold its interests in those contracts to Demco Corporation. CTC argued that it had only sold to Demco its interests in contracts executed in October 2007 and retained for itself its interests in the March 2007 contracts. Balfour replied that the October 2007 contracts, which did not contain mediation or arbitration clauses, superseded the March 2007 contracts and mediation or arbitration no longer could be demanded because each October 2007 contract provided that it "constitutes the entire [a]greement between the parties hereto [and that] [n]o oral representations or other agreements shall be binding on the parties except to the extent expressly stated in this [a]greement." CTC filed its president's reply certification, which asserted that the March 2007 and October 2007 contracts represented different phases of work and that the latter did not supersede the former.

The trial judge found that the March 2007 and October 2007 contracts were separate and distinct, that CTC was entitled to mediation and arbitration in accordance with the March 2007 contracts -- because it was only suing for relief based on those contracts -- and that the issue raised by Balfour regarding CTC's standing to seek relief on the March 2007 contracts was for an AAA arbitrator to decide. The judge also found that the first-filed rule was implicated but that special equities precluded its application. As a result, on March 9, 2011, the judge entered an order compelling Balfour to participate in mediation and arbitration pursuant to the provisions of the March 2007 contracts.

Balfour appealed this final order, R. 2:2-3(a)(3), arguing again that CTC lacked standing to enforce the mediation and arbitration provisions and that the trial court erred in not deferring to what Balfour claims was the ...


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